Ethan has $17 per week in his food budget. He splits his choices between pizzas and hot dogs. Each slice of pizza costs $2 while each hot dog costs $3. The total utility (TU) from each of these choices is set out in the table below. Units TU pizza 10 Marginal utility for pizza and hotdog (MU/$) for TU MU MU pizza hotdog pizza hotdog 5 9 (MU/$) for hotdog 1 2 18 3 20 12 4 22 15 5 23 17 1. Complete the table calculating marginal utility (MU) and marginal utility per dollar (MU/$) for both choices. Remember to show your work for at least one unit! 2. What is Ethan's utility maximizing choice? Justify your answer by showing your work! HINT: use the budget constraint equation to show the optimal choice!
Ethan has $17 per week in his food budget. He splits his choices between pizzas and hot dogs. Each slice of pizza costs $2 while each hot dog costs $3. The total utility (TU) from each of these choices is set out in the table below. Units TU pizza 10 Marginal utility for pizza and hotdog (MU/$) for TU MU MU pizza hotdog pizza hotdog 5 9 (MU/$) for hotdog 1 2 18 3 20 12 4 22 15 5 23 17 1. Complete the table calculating marginal utility (MU) and marginal utility per dollar (MU/$) for both choices. Remember to show your work for at least one unit! 2. What is Ethan's utility maximizing choice? Justify your answer by showing your work! HINT: use the budget constraint equation to show the optimal choice!
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter6: Consumer Choice Theory
Section: Chapter Questions
Problem 3SQP
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Transcribed Image Text:Ethan has $17 per week in his food budget. He splits his choices
between pizzas and hot dogs. Each slice of pizza costs $2 while each
hot dog costs $3. The total utility (TU) from each of these choices is
set out in the table below.
Marginal utility for pizza and hotdog
(MU/$) for TU
MU
MU pizza
hotdog
Units
TU
pizza
pizza hotdog
1 10
5
2
18
9
3
20
12
4
22
15
5
23
17
1. Complete the table calculating marginal utility (MU) and marginal
utility per dollar (MU/$) for both choices. Remember to show your
work for at least one unit!
2. What is Ethan's utility maximizing choice? Justify your answer by
showing your work! HINT: use the budget constraint equation to
show the optimal choice!
(MU/$) for
hotdog
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